The Lloyds Banking Group has announced that it intends to significantly boost the amount of money it lends to small and medium sized enterprises (SMEs). This year, it is planned that lending will increase by £1 billion.
The lending boost is not the only change Lloyds are introducing with the aim of making things easier for smaller businesses. There is a limit to how much money local managers can lend to this type of business without seeking central approval. This limit currently stands and £500,000, but the bank has now promised to double that figure. As a result, SMEs will have access to potential lending of up to £1,000,000 without the need for local managers to seek approval.
These changes come as part of a new initiative that the bank has recently announced. Its “SME charter” is designed to help smaller businesses and start-ups to benefit from better lending opportunities with the Lloyds Group. Overall, the bank has vowed that it will help 100,000 new firms to get started in business over the course of this year.
For many small business owners and entrepreneurs, the new SME Charter and the commitments it contains will come as welcome news. Recent reports have suggested that a large percentage of SMEs and new start-ups are funded by personal savings or loans from family and friends due to the difficulty of obtaining backing from banks.
Furthermore, it was recently claimed by the economy committee of the Scottish Parliament that the UK needs new credit sources to be made available to SMEs. According to the findings of the committee, about 70% of lending in 2012 came from Bank of Scotland or RBS. In light if these figures, the committee said that the industry would benefit greatly from increased competition. It also suggested that enterprise agencies need to build a more comprehensive knowledge of the various finance models available.
The Lloyds Banking Group includes a number of well-known high street names in banking and finance. As well as Lloyds TSB, the group also includes Bank of Scotland.
Alasdair Gardner, managing director of Commercial Banking for the Bank of Scotland, expressed his support of the new SME Charter. He said that it “sets out the pledges we are making to our customers.” Gardner went on to say: “We will be fair and transparent in all of our dealings with our customers; and will provide broader support through our relationship managers and business specialists, as well as a growing number of business mentors.”